By Adnan Seric, Michael Windisch, UNIDO, Holger Görg, Wan-Hsin Liu, Kiel Institute for the World Economy 1
COVID-19 supply chain disruptions provide an unprecedented opportunity to examine the resilience of global value chains. Data on trade flows and manufacturing output over the course of the pandemic suggest that the supply chain disruptions of early 2020 were of a temporary nature, and that extended global value chains currently interlinking many firms and economies seem to be resilient to trade and economic shocks at least to some extent.
Escalating geopolitical tensions and trade restrictions
Geopolitical tensions have risen, in a race to address the need for self-sufficiency—especially with regard to economic dependence on China—exemplified by the escalation in trade interventions in the lead-up to early December 2020. Close to 1,800 new restrictive interventions have been imposed in 2020 – over one and a half times the number in each of the two previous years, when the China-US trade dispute and a new wave of protectionism intensified (Figure 1)2. The adoption of discriminatory trade interventions outpaced liberalisations, despite the increase in new trade-liberalising measures during this period and the lifting of some emergency trade restrictions.
Amid rising US-China trade tensions in 2018-19, China already faced a particularly high increase in trade restrictions relative to other countries, which further intensified during the COVID-19 crisis. (Figure 2)Continue reading